Throughout the world, there is growing pressure to lower global carbon emissions and implement cleaner energy systems. While the development and implementation of solar panels, wind turbines, electric vehicles and more is encouraged by various stakeholder groups as a key piece to addressing environmental concerns, supplying the necessary mineral inputs to build these technologies is culminating in poor outcomes where mining is occurring. Copper and cobalt are two critical materials in many renewable energy solutions, and today most of the world’s supply comes from the Democratic Republic of the Congo. The DRC’s mining industry includes some foreign actors who have been questioned for their adherence to proper environmental, social, and governance standards when mining these minerals. This study will focus on the role of Chinese and Canadian firms in the DRC and evaluate the role they play in shaping human rights and economic development outcomes.
China and Canada are key foreign actors in the Congolese mining sector. I studied two Chinese firms and one Canadian firm to assess the impacts these countries have on human rights and economic development in the DRC, and to compare them. The Chinese firms and projects include China Nonferrous Mining Corporation, which owns the Deziwa Mine and a consortium of Chinese state-owned companies which own the Sicomines Mine. The Canadian case in Ivanhoe Mines, which owns the Kamoa-Kakula Copper Complex. Data was collected from various secondary sources, including reports, government documents, and case studies. I hypothesized that Chinese firms will see better economic development outcomes and Canada will contribute to better human rights outcomes.
The market for copper and cobalt in the DRC is incredibly complex. The interaction between various individuals, groups, institutions and countries is inevitable. The involvement of China is significant given the large stake the country has in the Congolese mining industry, including the billions of dollars of investments it has made within the past approximately decade. Canada’s involvement, although much more limited in terms of mine ownership and investment, is still significant given that the Canadian corporation owns the world’s largest high-grade copper discovery at its mine site.
To explore the relationship between mining and human rights and economic development outcomes, I based my analysis on institutional economic theory (IET). This framework looks at the role of institutions in shaping economic behavior and outcomes. IET also considers two categories of institutions, formal and informal. Formal institutions are established rules, laws or organizations. For this analysis, formal institutions include legal regulation, labor laws, contracts, and mine financing. Informal institutions are unwritten norms, customs, or social conventions. For this analysis, informal institutions include corruption and social conflict.
|
Formal or Informal Institution |
Institution and Description |
Example |
| Formal | Legal Environment: Any law which governs the operation of a mine. | Mining Code of the Democratic Republic of the Congo. |
| Formal | Labor Laws: Congolese-based laws mandating the treatment of formally-employed workers. | DRC Penal Code or Canada’s Responsible Business Conduct Abroad Strategy. |
| Formal | Contracts: Legally recognized agreement between two parties involved in the operation of a mine. | The Sicomines, the Somidez or Kamoa joint ventures. |
| Formal | Mine Financing: Loans, grants, or other funds which are directed to the mine or the DRC. | TSX financing or Sicomines loans. |
| Informal | Corruption: Abuse of entrusted power for personal gain. | Bribes to public officials. |
| Informal | Social Conflict: Disagreement between individuals or groups due to differences in interests, beliefs, or goals. | Conflict between mining companies and government. |
Chinese mining firms observed in this analysis are state-owned corporations, meaning they serve the objectives of the Chinese government and receive funds from state-backed sources. Through the development of mining projects and subsequent contracts, the Chinese cases have awarded loans and grants amounting to billions of dollars to the DRC for the development of mines and infrastructure, a key component of the two countries’ mining relationship. Chinese mining companies play a huge role in developing mineral reserves in the DRC, but through government documents and human rights reports, corrupt practices have also come to characterize this relationship. The Deziwa and Sicomines mines have seen reports of labor-right abuses but have contributed to job creation. Additionally, both of these mines have contributed to infrastructure developments, but the nature and size of these loan agreements places heavy debt burdens on the DRC for long periods and concerns are arising about whether the country will be able to pay off these amounts.
Canadian mining in the DRC currently occurs through corporate entities. Canadian mining operations serve the interests of company shareholders and adhere to the pertinent Canadian laws and stock exchange regulations to which they are subject. The Ivanhoe mine, Kamoa-Kakula, has seen public commitments to human rights and even the development of public works projects, but little is known about the long term impact of these commitments. While there are public commitments to human rights, the Kamoa-Kakula mine has negativley impacted human rights through the eviction of a nearby community to make way for its mine’s expansion. Lastly, the mine has made an effort to make all financial records publicly available, making it relatively easy to trace the impact the mine has on the Congolese economy. Currently, the Kamoa mine accounts for about 4% of the DRC’s GDP and generates $300 million in government revenue per year.
This study shows that the role Chinese and Canadian firms have on human rights and economic development are complicated. While mining operations by both countries are creating jobs, developing some infrastructure, and increasing revenue for the country, labor-right abuses persist, and matters of corruption are constantly being speculated at. As the world continues to pursue mineral reserves in the DRC, more research is needed on the role of all actors and institutions in the Congolese mining sector.
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